How to choose the right charitable corporate structure

How to choose the right charitable corporate structure: many of us like to donate to charities and support good causes. For others, though, this is not enough, and they want to incorporate their own charitable company. This may be because of personal experience in a particular area or because they identify a specific area that they feel is under-represented by existing charities. Whatever the reason, it is an admirable ambition to start a charitable company, but right from the start you will be faced with some complex decisions.

The demands of a charity

Charities are perhaps even more closely scrutinised than standard companies. This is understandable as the charity will be collecting donations from the public. As such, it is only right that the public expects a high standard of governance and transparency as to the charity's operations.

It is vital, then, that your charity enterprise is set up properly and meets all regulations. Even slight errors can result in bad publicity and damage to the charity. Coddan has a wealth of experience in setting up charitable companies and can provide a full service to ensure that all requirements are met.

Charity structure

One of the first decisions to make is to define the legal structure of the charity organisation. This has actually become more complex recently, with the introduction of the Charitable Incorporated Organisation (CIO). This structure was introduced in the Charities Act 2006 and became available for new charities to adopt in December 2012. The main benefit of the CIO lies in having one regulator, the Charity Commission, instead of also being regulated by Companies House. The format also offers the protection of registration, including limited liability for its trustees, but it is still a largely untried structure. The more proven alternative is to set up a charity company limited by guarantee.

Getting started

Clearly, there is much to think about how to establish a charity company and working with an expert like Coddan will help you decide on the structure that is right for your charitable association. Once that is done, however, you still need to complete some important tasks. You will need to have at least twotrustees, although more is often thought to be preferable.

You will need to produce governing documents, outlining your charitable purposes and the proper management of the charity. After that, you will have to decide on fund raising methods and prepare for annual returns and annual accounts. This may sound complex but it should not deter you. With an experienced partner like Coddan to guide you through the whole charitable company formation process, you will soon be up and running.